Banana Investments: Entrepreneurial Growth in Tanzania

When an entrepreneurial African business is offered a loan requiring dollar-denominated payments, should the owners accept the terms and ensuing risks?
Darren Bounds, Ken Lee, Garrett Wright, Murray Low, Paul E. Tierney Jr., Donath Olomi  | Spring 2010
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Banana Investments Limited started as a home business with the husband-and-wife team of Adolf and Alfoncina Olomi, who tapped a family recipe to brew traditional Tanzanian banana wine. As demand for the drink grew, the Olomis built a brewery and eventually employed 400 people. Now, after months of negotiation, the East African Development Bank has offered a US$800,000 loan, which Banana Investments could use to modernize the brewery. But the loan carries currency-exchange risk since the bank wants payments in US dollars, as well as labor issues because modernization would reduce the need for workers. In this case students examine Tanzania's business climate and economy, Banana Investment's financial data, and the loan's terms to determine whether the Olomis should accept.

Case ID: 100413

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